Scleroderma is characterized by progressive fibrosis due to activation of fibroblasts and unregulated production of collagen. Transforming growth factor-beta (TGF-beta) plays a pivotal role in initiating and sustaining fibroblast activation. Intracellular TGF-beta signal is transduced by Smad family proteins. We showed that Smad3 mediates TGF-beta stimulation of collagen production, and this response is antagonized by Smad7 in a negative feedback loop. TGF-beta activates Smad-independent signal transduction pathways as well, but their role in fibroblast responses has not been established. Furthermore, the fibroblast genes that are direct transcriptional targets of Smad3 are not fully characterized, and the physiological mechanisms underlying collagen stimulation by Smad3, and repression by Smad7 remain poorly understood. We propose to investigate the mechanisms that TGF-beta uses to elicit maximal transcriptional responses in fibroblasts in vivo and in vitro. In Specific Aim 1 we shall investigate the functional role of a newly identified Smad target (Egr-1) in TGF-beta-dependent collagen transcription, and characterize its expression and regulation in normal and scleroderma fibroblasts. In Specific Aim 2 we will use cDNA arrays to compare global gene expression in Smad3-/- and Smad3+/+ murine dermal fibroblasts. In addition, we will use a novel selective inhibitor of the TGF-beta type I receptor kinase in order to identify Smad-independent TGF-beta-inducible genes in primary fibroblasts. In Specific Aim 3, we will examine the regulation and mechanism of action of Smad7 in dermal fibroblasts. Because genetic modification in mice currently provides the most physiological system to test the role of altered gene expression in a pathological process, in Specific Aim 4 we will create mice with fibroblast-specific conditional deletion of the Smad7 gene, and determine if loss of Smad7 alters susceptibility to fibrosis induced by TGF-beta or bleomycin.